What's at Stake this week? | February 4, 2024

Expatriates in the UAE are adapting to the changing economic landscape by diversifying their income sources and adopting cost-effective living strategies to save up and invest in Dubai's real estate market. One of the notable ways expats are making their move toward the real estate market is by transitioning from being tenants to buyers. This shift is driven by high market potential and the limited property supply which caused a 24% rental price increase in 2023, as per Arabian Business. Property investments are seen as a dependable avenue for ensuring long-term financial stability and success. In 2024, this trend is expected to persist, driven by the steady influx of expatriates and the anticipated growth of Dubai's real estate market.?

??Market Watch: KSA

The birth of Vision 2030

Key Insights:

• With a high reliance on oil revenue, Saudi Arabia navigates its way out of future economic challenges through Vision 2030
• Vision 2030 aims to raise Saudi's non-oil exports from 16% to 50% of GDP and non-oil revenues from SAR 163bn to SAR 1tn
• Saudi Arabia recently announced a pause in its plans to increase crude production capacity from 12 million barrels per day to 13 million barrels per day

Have you heard of the 'Dutch Disease'? It’s a term that had significant economic implications for several countries; however,? didn't quite fit within Saudi Arabia's economic landscape. So, here's the original story: the Netherlands discovered natural gas in the 1970s, leading to an economic imbalance due to over-reliance on one sector. Fast forward, and we see Saudi Arabia in a somehow similar boat, heavily dependent on oil, which makes up more than half of its government revenue. This reliance poses a critical challenge because when oil prices fluctuate, the entire economy feels the shock.

But Saudi Arabia isn't standing still. It's actively rewriting its economic story with Vision 2030, a strategic plan to diversify its economy. This initiative, launched in 2016, seeks to raise Saudi's non-oil exports from 16% to 50% of GDP and non-oil revenues from SAR 163bn to SAR 1tn marking a significant shift away from oil dependency to a more balanced economic portfolio encompassing growth in sectors like:?

• Economic development and policy: Saudi Arabia is enhancing its appeal to global talent and investment through initiatives like the introduction of new visa reforms. The new Premium Residency visas encourage international talent and capital inflow, which aligns with goals designed to attract 480 global firms, generate 1.6 million jobs, and increase the population to 60 million by 2030

• Tourism: Another front-runner in this diversification race. After experiencing a 156% increase in international tourist arrivals in 2023 surpassing pre-pandemic levels, the country has revised its 2030 tourism target to an impressive 150 million visitors instead of the initially planned 100 million

• Finance and investment: In the venture capital world, KSA is making waves as well. Its top position in the 2023 MENA venture capital rankings is a clear indication that the Kingdom is on the right path to fostering a dynamic startup ecosystem

• Real estate: In 2024, Saudi real estate marked a notable achievement with $27 billion in transactions, showcasing the sector's potential. Additionally, ambitious projects like NEOM and The Red Sea Project are more than just infrastructural developments; they are pillars of this new economic vision

Did you know? Saudi Arabia recently announced a pause in its plans to increase crude production capacity from 12 million barrels per day to 13 million barrels per day, with potential extensions to OPEC+ production cuts beyond March 2024.

Bottom line? Steering towards 2030, Saudi Arabia is playing it smart, by not entirely turning away from its oil-rich heritage but using it as a launchpad for broader economic success. By balancing its rich natural resource wealth with diverse economic development, Saudi Arabia aims to dodge the 'Dutch Disease' and set a global example of how to innovatively thrive amidst economic challenges.

Read more here.

??Strategize With Stake

Generation Z's prescription for success

Key Insights:

• Despite preferring low-risk investments, Gen Zers still face financial challenges
• Studies show that over a third of Gen Z individuals have encountered setbacks, leading to increased debt and zero savings
• Debt-free Gen Zers can look forward to a bright financial future, thanks to Dubai's strong 2023 economic performance and its promising 2024 real estate market outlook

In an era marked by rapid technological advancement and economic volatility, the path to financial stability presents its unique set of challenges, especially for Generation Z. You read it right; because if you think Gen Zers are still babies, heads up this 2024, they hit 27 years!

According to a comprehensive guide by Saxo Bank, while Gen Z invests in sectors like finance (39%), real estate (37%), and high-tech/emerging technology (37%) with a low-risk approach, aiming to grow wealth, this investment strategy alone doesn’t guarantee their salvation from financial difficulties.

A CNBC study from October 2023 shows that over a third of Gen Zers have faced setbacks, leading to increased debt and zero savings. In the UAE, such challenges are evident through the concept of 'doom spending,' where Gen Z individuals, overwhelmed by the desire to attain fundamental adult milestones and influenced by the older generation's success, prioritize haphazard luxury spending over long-term wealth accumulation. While the world's innovations tempt them, financial methods like 'Buy Now, Pay Later' (BNPL) provide a means to indulge without immediate financial strain. This trend, while providing temporary relief, could result in long-term financial repercussions.

Despite these obstacles, the future shines bright for debt-free Gen Zers or those aiming to build wealth strategically with an eye on the Dubai real estate market. The real estate sector in Dubai stands out as an attractive investment avenue for building a diversified portfolio, given the city's 2023 economic achievements, and lack of signs of a market slowdown in 2024.

Here's your assurance:?

• Substantial market growth predicted: Chairman Lewis Allsopp, a Dubai real estate veteran with over two decades of experience, predicts a 6-10% average sales price increase in 2024, reflecting a vibrant market and strong investor confidence
• Substantial market growth witnessed: In the week ending January 26, 2024, the Dubai Land Department recorded transactions worth AED 14.2bn ($3.9bn), including the sale of 312 plots and 2,696 apartments and villas
• Record-breaking foreign investment: The UAE ranked second globally in new foreign investments, with a 28% increase in 2023, as reported by the UNCTAD
• Dubai's growing GDP: H.H. Sheikh Hamdan bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of The Executive Council of Dubai, announced a robust 3.3% surge in Dubai’s GDP in 2023, further cementing the Emirate's position as a leading economic powerhouse and an attractive destination for real estate investment

Bottom line? Despite the challenges Gen Z faces, including the pressure to increase their savings, with 60% prioritizing this in their 2024 resolutions, the key to financial success is striking the right balance between saving and spending, coupled with the patience and perseverance applied to regular investing in promising markets like the Dubai real estate market.